The US stock market posted stellar benchmark performance in 2024 S&P500 index reached an all-time high closing value of 6,090.27 on December 6.
But things could get even better in 2025. According to Charles Schwab, based on fourteen interest rate cycles since 1929, the S&P 500 index has returned 86% of the time twelve months after the first rate cut in the cycle. The benchmark index posted negative returns after interest rate cuts in 2001 and 2007, mainly due to the recession.
In September 2024, the Federal Reserve began its ongoing rate cutting cycle by cutting interest rates by 50 basis points. Since the current economic environment does not appear to be in recession, it may be wise to expect the index to continue growing until September 2025. Many analysts seem to agree with this forecast. UBS expects the S&P 500 to reach 6,400, while Oppenheimer Asset Management chief investment strategist John Stoltzfus expects the index to reach 7,100 by 2025.
Against this backdrop, it makes sense for retail investors to take small positions in high-quality stocks, thanks to the secular tailwind. This is why the choices of these two companies fit the bill.
When you invest in stocks in database software and cloud services, Oracle (NYSE: ORCL) is an obvious choice. The company’s top and bottom-line performance in the second quarter of fiscal 2025 lagged consensus estimates by a slight margin (for the period ended November 30). Still, the company’s prominent role in the ongoing AI revolution and its strength in traditional databases make it a valuable choice in December 2024.
Oracle’s cloud services and licensing support revenues account for nearly 77% of the company’s total revenue. Its cloud business is expected to generate $25 billion in revenue in fiscal 2025. Oracle’s prominence in delivering artificial intelligence (AI) optimized data center infrastructure is the key factor driving the growth of its cloud business. The company’s Oracle cloud infrastructure is used by major AI companies such as Nvidia, MetaplatformsxAI, OpenAI and Cohere to train their top generative AI models.
Oracle is also focused on further improving the performance of its cloud infrastructure and recently released the world’s largest and fastest supercomputer, using up to 65,000 Nvidia H200 GPUs. This performance advantage has made Oracle’s cloud infrastructure faster and cheaper than many competing infrastructure clouds, allowing it to win large AI training workloads. The company’s GPU usage also increased by a whopping 336% year over year in the second quarter.
Oracle distinguishes itself from many other cloud infrastructure players with its unique cloud architecture. The company has chosen a modular design approach that requires only six standardized data racks to build a cloud region that delivers all services to customers. The company can easily and cheaply and efficiently scale the data center infrastructure from 50 kilowatts to 1.6 gigawatts, in line with demand. The standardization in racks and services has also helped Oracle deploy automation tools effectively across its cloud infrastructure.
Oracle has also built a broad geographic footprint with 98 cloud regions. The company has entered into multi-cloud agreements with Microsoft‘s Azure, Alphabet‘s Google Cloud, and Amazon‘s AWS, which further offers customers high flexibility to deploy their systems in the cloud.
Granted, Oracle doesn’t seem to be the most popular stock on Wall Street. However, the company recently traded at just 8.43 times trailing-twelve-month sales – better than the software industry’s average price-to-sales ratio (P/S) of 10.4. With multiples expanding in line with robust growth, Oracle could see significant share price gains in the coming months.
The second database specialist worth investing in is MongoDB (NASDAQ: MDB). Although the company handily managed to beat consensus expectations for revenue and earnings in the third quarter of fiscal 2025, shares have fallen following unexpected news of the departure of former CFO and Chief Operating Officer Michael Gordon in late January 2025. The subsequent price correction has excellent entry opportunities for private investors.
MongoDB added nearly 1,900 new customers consecutively and ended the third quarter (ended October 31) with a total number of customers of more than 52,600. Additionally, the company served 2,314 high-value customers (generating at least $100,000 in annual recurring revenue) in the third quarter, compared to 1,972 customers in the same quarter of the previous year.
Atlas, a cloud-native and integrated suite of database tools and services, accounts for nearly 68% of MongoDB’s total revenue. The cloud platform’s revenue grew 26% year-over-year in the third quarter, driven by robust enterprise adoption to run mission-critical projects. Atlas served more than 51,100 customers at the end of the third quarter, compared to more than 44,900 in the same quarter of the previous year.
MongoDB is focused on reallocating some of its go-to-market resources from medium to large enterprise channels. While the reallocation of funds from the mid-market to the enterprise channel is expected to reduce the pace of direct sales customer growth in the short term, it should lead to higher revenue growth in the long term.
MongoDB uses AI tools and professional services to modernize customers’ existing applications. Because many of these applications are based on relational databases, the company also uses a relational migrator to migrate them to the MongoDB platform (suitable for documents and other complex data structures). This modernization reduces costs, time and the risk of data loss or corruption. Therefore, MongoDB sees a solid long-term growth opportunity in the market for modernizing existing applications.
Finally, MongoDB is also poised to benefit as companies increasingly focus on AI-powered applications, which primarily require querying complex and rich data sets. The company says its unified platform approach (combining source data, metadata, operational data and vector data) is superior to using multiple complex databases.
Given the various growth tailwinds and strong financials, MongoDB now looks like an attractive buy.
Have you ever felt like you missed the boat on buying the most successful stocks? Then you would like to hear this.
On rare occasions, our expert team of analysts provides a “Double Down” Stocks recommendation for companies they think are about to pop. If you’re worried that you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
-
Nvidia: If you had invested $1,000 when we doubled in 2009, you would have $348,112!*
-
Apple: If you had invested $1,000 when we doubled in 2008, you would have $46,992!*
-
Netflix: If you had invested $1,000 when we doubled in 2004, you would have $495,539!*
We’re currently issuing ‘Double Down’ warnings for three incredible companies, and another opportunity like this may not happen anytime soon.
See 3 “Double Down” Stocks »
*Stock Advisor returns December 9, 2024
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Manali Pradhan has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, MongoDB, Nvidia, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has a disclosure policy.
History says the S&P 500 will soar in 2025. 2 top stocks to buy before that happens. was originally published by The Motley Fool
